The Bitcoin (CRYPTO: BTC) price is up 3% since this time yesterday. That puts the world's leading crypto up 4% over the past week.
One Bitcoin is currently trading for US$23,924 (AU$34,085).
The last week's move higher will be welcomed by crypto investors. However, the Bitcoin price remains down 50% year-to-date and down 62% from the record highs reached on 10 November last year.
That timing didn't exactly work out well for El Salvador's government.
The Bitcoin price hit its record high two months after El Salvador became the first nation in the world to adopt the crypto as legal tender. President Nayib Bukele made the virtual groundbreaking announcement on 10 June 2021. The legislation took effect in September 2021.
Image source: Getty Images
Unswayed by Bitcoin price retreat
According to calculations by Bloomberg – based on Bukele's tweets – the 2,381 Bitcoin El Salvador bought with public funds are worth about 50% of what the government paid for them.
Despite the big retrace in the Bitcoin price, El Salvador's finance minister, Alejandro Zelaya, stood by the decision.
According to Zelaya (quoted by Bloomberg):
For some, it's something new and something they don't entirely understand, but it's a phenomenon that exists and is gaining ground and will continue to be around in the coming years.
Zelaya was also unswayed by surveys indicating the majority of businesses and households continue to preference fiat currency over the crypto:
We aren't going to have results overnight. We can't go to bed poor and wake up millionaires. New technologies have shown how people in previous years were afraid of things like websites and digital business, but it's been shown through time that reality imposes itself.
Crypto-backed bond still in the pipeline
Not everyone is as enthusiastic about the nation designating Bitcoin as legal tender.
The IMF counts among those critics. Yet El Salvador's government intends to move forward with its plans for a US$1 billion Bitcoin-backed bond even as it negotiates a US$1.3 billion extended fund facility with the IMF.
Zelaya said the Bitcoin price crash had only delayed the rollout of the crypto-backed bond, not derailed it.
"I believe in the traditional, international monetary system just as I believe that new technologies are going to help human beings in the future," he said. "So, I think making that transition is vital and it would be wrong of us to not pursue financial innovation that could benefit El Salvador."
